The Ordinary Business of Life: A History of Economics from the Ancient World to the Twenty-First Century (review)

This volume, which appears in the United Kingdom as the Penguin History of Economic Thought, is an impressive intellectual achievement. The challenge of surveying the central themes of economic discourse from classical Greece through the controversies that mark professional economics today is daunting. Roger Backhouse addresses it by bringing insights from a number of disciplines to bear on the subject. The integration of relevant literature from religious, philosophical, and scientific traditions with the flow of economic argument through time is admirably handled.

The first half of the book proceeds in chronological sequence. The first two chapters are devoted to the ancient world (with commentary on Homer, Plato, Aristotle, et al.) and the Middle Ages (with attention to the perspective on economic life offered by Judaism, early Christianity, and Islam). The focus then shifts to the "emergence of the modern world view" in the sixteenth century that embraces the Renaissance and Reformation, along with the rise of the European nation-state. The chapter that follows examines science, politics, and trade in seventeenth-century England: the scientific dimension is linked with the founding of the Royal Society; the political dimension draws attention to the impact of the English Civil War and the post-Cromwellian Restoration; the trade dimension treats the Anglo-Dutch commercial rivalry, and the debates between those with a stake in chartered monopolies and the advocates of freer trade. Two chapters address eighteenth-century developments: the first considers "absolutism" in France and the physiocratic response to it; the second inspects the Scottish Enlightenment and the contributions of Hume, Steuart, and Smith. A chapter on classical political economy—which in this treatment includes Marx—is bounded by the dates 1790 and 1870.

The second half of the book is devoted to post-1870 developments. The approach then becomes thematic, rather than chronological. Thus, specific chapters analyze the "split" between history and theory in Europe between 1870 and 1914; the rise of American economics (1870–1939); money and the business cycle (1898–1939); econometrics and mathematical economics (1930 to the present); welfare economics and socialism (1870 to the present); and economists and policy (1939 to the present). The thematic approach to this material lends itself easily to valuable discussions of the arresting ways in which shared problems were handled differently in different countries. Backhouse offers a rewarding account, for example, of how and why the treatment of money and cyclical phenomena took divergent turns in Britain, Sweden, Germany, Austria, and the United States. Similarly, differing impulses underlying the mathematization (or possibly the "Americanization") of the discipline are perceptively treated. He notes—correctly—that the apparent supremacy of the United States in the second half of the twentieth century owes much to the leavening of economists in flight from repressive regimes in Europe.

The concluding chapters offer a judicious treatment of the manner in which disciplinary innovation in the recent past—with the competing claims of Keynesians, monetarists, post-Keynesians, and the new classical macroeconomists—has been driven primarily by analytic dynamics internal to the discipline, as opposed to puzzles generated by observation of the real world.

Although most of the leading contributors to economic discourse through the ages are included among his cast of characters, Backhouse has chosen to emphasize throughout the historical context that has nourished particular strands of economic argument. He has largely eschewed detailed textual analysis of the canonical "big thinkers." This procedure does entail some costs: a reader solely dependent on his text, for example, would not be well equipped to appreciate the conceptual bite of a labor theory of value within the Ricardian and Marxian systems. But there are other studies that can speak to this need. We should be grateful for what Backhouse has accomplished—and he has accomplished...